City of San Marino
Policy for Operation of Donations Fund (Fund 281)
Background and Purpose
The Donations Fund is a component of the City's General Fund. From a practical perspective, this means that excess or deficit balances in the Donations Fund are "closed out" into the General Fund at fiscal year-end. City departments that engage a donations program should closely monitor donations income and expenditure in their donations program during the fiscal year to avoid accumulation of deficit balances that will require "absorption" by the General Fund. Absorption is an unintended form of General Fund subsidy.
Donors have reasonable expectation that donations shall be used according to donor intentions. The satisfaction of donor intent may not follow the City's fiscal year calendar. Accordingly, the City and operating donations departments shall maintain systems of accounting and budgetary monitoring that manage excess balances between fiscal years.
Budgetary Management
• The City Council shall adopt revenue estimations and proposed expenditures for departmental donations activity each fiscal year. • Actual expenditures may not exceed budgeted expenditure appropriations. The City Manager is authorized to transfer budgeted amounts between operating accounts.
• The City Council shall approve any and all amendments to expenditure appropriations throughout the fiscal year. All expenditure amendment proposals shall rest upon the operating department's reasonable expectation for offsetting donation revenue.
• Donations of miscellaneous nature received in excess of adopted estimated revenue are not allowable for expenditure unless and until the City Council authorizes amendment to expenditure appropriations. • Expenditures and purchase order commitments shall not be executed in advance of a donation or donations.
Accounting Management
• The Finance Department shall maintain a system of donations accounting that documents, at line-item level for each category of donation, beginning balances, annual revenue and expenditure activity, and ending balances.
• Encumbrance accounting, under which purchase order, contracts and other commitments for the expenditure of monies are recorded to reserve that portion of the applicable appropriation, shall be employed as an extension of formal budgetary control in the Donations Fund during the year.
• At the end of each fiscal year, all appropriations lapse. Accordingly, purchase orders and encumbrances are cancelled. Encumbrances can be re-appropriated as part of the following year's budget by action of the City Council.
• The City will capitalize assets and equipment with individual minimum value of $5,000 or greater.
Purchasing and Procurement Management
Departments that operate a donations program shall organize their acquisition and accounting procedures to achieve compliance with all terms of the City's procurement policies.
Assignment of Fund Balances Between Fiscal Years
The City Manager shall authorize accumulated excess balances to be carried between fiscal years as an assignment against General Fund fund balance.
Excess balances eligible for assignment must be of material nature and possess intention for specific use. The Finance Department shall keep records of assignment sufficient for external auditor evaluation and public review.